Answering the climate challenge and managing operational impacts is one of the largest challenges facing companies, particularly corporations with large regional or global footprints. As enterprise businesses scale up ambitions, they run the potential of making major mistakes when it comes to creating and publicizing their net zero commitments—whether those mistakes are intentional or not.
Because net zero is such a critical bar for companies to aim for as the world works to keep global temperatures within a safe realm, global businesses must be aware of how energy consumption and output plays a role.
In this post, we’ll take a closer look at what net zero commitments are, how your company can make them with integrity, and how you can avoid common pitfalls along the way.
What is a Net Zero Commitment?
A “net zero” commitment is a promise to cut greenhouse emissions to reach as close a balance as possible between the greenhouse gases a company puts into the atmosphere and those taken out as possible. When what it adds is no more than what it takes away, we reach net zero.
One of the world’s leading authorities on this emissions reduction effort is the United Nations Net Zero Coalition, which is a unified body of governments, businesses, and global institutions. For enterprises that are aiming to reduce carbon emissions in an attempt to reach net zero, the UN and other leading bodies provide practical resources and agreements on how to do so successfully.
As organizations strive for net zero, having implementation protocols in place can make it easier to build and achieve strong outcomes for our climate.
4 Examples of Corporate Mistakes with Net Zero Targets
Many organizations are working to minimize contributions to – or better, implement solutions to combat – the negative effects of climate change. Unfortunately, there is often misalignment between what companies think they can do and what they say they will do.
Whether companies mean well or simply want to make headlines, we’ve identified four common mistakes that companies starting or advancing on their net zero journey can make:
Example 1: Inaccurate Data Averages (Monthly and Yearly)
One of the biggest mistakes with net zero commitments involves a lack of regular data review. By not measuring at the right frequency or with sufficient accuracy, enterprises often make vague claims that can’t be followed or satisfied. To avoid this error, businesses must put in place qualified personnel or consultants to enable them to measure and monitor the carbon emission areas that are most material to their operations.
The New Climate Institute and Carbon Market Watch has even identified how some of the world’s leading corporations are failing to meet climate promises based on raw data and corporate milestones.
Example 2: Failure to Invest in Automating Carbon Accounting
Monitoring carbon emissions is becoming a standard operating procedure at many companies but without proper controls (governance or the “G” in ESG), there are plenty of ways that monitoring can fail to provide reliable data. For example, individuals tasked with reviewing the data might make honest mistakes within spreadsheets or manual reporting.
Even small discrepancies can place corporations at a vulnerable position, in which they’re not able to meet the net zero carbon promises they’ve made.
Investing in automation that produces audit-ready records minimizes the manual lift that makes carbon accounting tedious and at times, unreliable. With the right carbon accounting platform, businesses can become better stewards of the carbon emissions data that makes it possible to move climate goals forward.
Example 3: Failure to Set Specific (and Attainable) Targets
To achieve any goal, the details have to be tangible, specific, and actionable. When focusing on the reduction of carbon emissions in an attempt to reach net zero, enterprises often make vague claims that can’t be followed or met easily.
Failure to set and establish science-based targets can lead to mistakes and misconceptions in how to meet those goals and, importantly, how to prove them. When businesses set targets based on estimates, hopes, or preconceived notions, the environmental reality rarely matches up.
A 45% reduction in global greenhouse gasses is needed by 2030 in order to keep global temperature increases at bay. This means that corporations, especially those that make net zero commitments, need to be precise in their own individual targets and carbon reduction measures. The global temperature needle doesn’t slide when organizations operate from an imagined, yet unrealistic, scenario.
Example 4: Over-Reliance on Carbon Offsetting and Renewable Energy Certificates (RECs)
In many cases, companies are banking on strategies like purchasing carbon offsets and/or renewable energy certificates to help manage their net zero claims. Carbon offsetting means investing in carbon reduction projects like reforestation, and RECs are a legal instrument used when accounting for clean energy procurement and consumption on a shared grid. These things can help a company worth towards their decarbonization intentions and boost their public image, but they’re often not enough to actually meet net zero goals.
When these methods for reaching net zero commitments fall short, there is often no backup plan for corporations that have put most of their emphasis here. The Corporate Climate Responsibility Network is one organization that grades global businesses on their energy integrity, and the group found that many popular names (like Amazon and Ikea) ranked poorly in terms of energy integrity.
These rankings illustrate the difference between public announcements (which are often positive) and realistic carbon practices (which can be less than ideal).
Some companies are moving in the direction of directly procuring clean energy – even doing so on electric grids where new clean energy projects will have a larger impact on decarbonizing that grid overall. The Clean Energy Buyers Alliance and other organizations are helping not only share best practices but support the broader marketplace for traditional and virtual power purchase agreements (PPAs and VPPAs) for clean energy.
What Can Corporations Do to Avoid Pitfalls or Errors?
For corporations that want to avoid common pitfalls and errors in net zero projections, having a realistic plan for achieving net zero is foundational.This may involve understanding the current climate science, as well as any regulations or local requirements they will need to comply with, and take practical or actionable steps to meet them—even if they’re different from steps seen as trendy or popular.
Additionally, maintaining a sense of corporate transparency on reducing carbon impacts includes having an accurate and honest reporting structure in place, whether or not the general public understands or cares about which goals are set. After all, curbing impacts – and in the process reducing a company’s potential liabilities from carbon emissions – means much more than protecting a public image.
Enterprise leaders must also consider joining forces with others who are taking deliberate climate actions. This involves being knowledgeable of agreements, joining pacts, hitting compliance targets, and other tangible steps that drive efforts forward. By associating with the right partners, authorities, and governing bodies, businesses can gain access to modern climate resources and produce auditable and actionable data.
Carbon Accounting Software Plays a Role
Carbon accounting software gives enterprise businesses a transparent and data-backed picture of their current carbon trends. With Cleartrace, organizations can benefit from smart and automated features that make reporting a breeze.
- Hourly Emissions Tracking – It’s more important than ever to be able to receive, collect, track, and view your attributions to validate delivery, receipt, consumption, and environmental impact.
- Automate New Data Collection – With net zero goals in place, businesses shouldn’t need to spend needless time on manual processes.
- Monitoring Upstream and Downstream – Avoiding mistakes always involves a holistic view of your energy activities. Cleartrace uses near real-time data to monitor on-site generation, storage, grid-procured energy, consumption, and renewable energy certificates (RECs) in a single location.
Reduce Carbon Emissions with Cleartrace
For businesses that want to achieve a clearer and more accurate picture of emissions, responsible measurement is key. Carbon accounting software helps corporations understand their unique carbon emissions levels and make deliberate changes in order to positively affect the world at large.